Sticking to Basics

No-frills messaging service pays off for Utah credit union.

When Granite Credit Union, Salt Lake City, was mulling the introduction of wireless financial services, it came up against a sobering fact: although wireless technology is ubiquitous, fewer than 10 percent of cellular telephones are equipped with Wireless Application Protocol (WAP), which turns mobile phones into Web browsers. So Granite opted for a more tactical solution: offering an alert service based on the Short Message Service (SMS) standard, which allows messages to be sent to any device that supports text messages and e-mail.

Granite partnered with SO Systems, an Orem, Utah-based credit union service provider, and Air2Web, an Atlanta-based mobile Internet provider, to offer m*Teller, an SMS-based service that provides on-demand notifications of expiring certificates of deposit and other services, as well as insufficient fund alerts. In turn, these notifications, which customers typically receive via mail, are reducing Granite's operating expenses.

"Penetration of this technology is still low in the industry, and not many credit unions our size are adopting this technology. We are not really pioneers, but by offering SMS alert technology, we are industry-leading," said Curt Doman, president and CEO of Granite Credit Union, which has 34,000 members and $165 million in assets.

"If we require everyone to be a WAP user, or to have an Internet-ready PDA personal digital assistant, there will be no dramatic user adoption," said Dale Gonzalez, vice president of research and development at Air2Web. "By offering a platform that supports plain SMS phones, there will be users."

Although other Air2Web customers, including the Motorola and Delta credit unions, offer a menu of wireless offerings such as account transfers and balance information, Granite is sticking to alerts for now. "We can support money transfers, but it is too cumbersome right now to do on SMS devices," Doman said. "We may turn on the service in the future, but we want to find a better way to offer it."

Recognizing that the ability to push information to users will drive adoption of wireless, Granite opted for alerts, or targeted messages, about over limits on credit cards, insufficient funds for accounts, certificate of deposit and safe deposit box renewals.

Customers can sign up for the m*Teller service either within a physical branch or at the credit union's Web site. On the home page, members enter their device of choice, its dialing number, and how often they wish to receive alerts (daily, weekly or monthly).

Granite intends to use the platform to send targeted marketing messages.

"While low balance alerts are helpful, we want to take this service to the level of doing important marketing to members," Doman said. "If we know a loan special is about to launch and specific members showed an interest, we have an automated way to tell them. Not to mention, if a cell phone goes off, it gets more attention than a piece of mail."

The wireless updates replace the costly mailings that typically arrive close to or past renewal dates. It was not uncommon for customers to receive return check notices up to three days after a check bounced. "We want to omit the paper notices," said Granite's Doman. "We expect to see a savings due to reduced paper handling, and diminished mailing labor and postage costs."

Granite's goal is to have half of its 5,000 electronic banking users signed up for the service within 12 months. This growth could provide a return on investment between 18 and 24 months.